Herman Driesens, manager at Amberwood Rotterdam, regularly publishes peanut market updates on LinkedIn. The below is a quick overview of their findings in April 2020. Despite the devastating Corona virus affecting all of us around the world, the peanut market has become very active.
Since early March the spot market in Europe is on fire with prices reaching USD 1850/1900 FOT for blanched 38/42 and USD 1650/1700 FOT for raw 38/42, 40/50. Demand has increased enormously with many people sitting at home ordering a lot more products than usually, including snacks and peanut butter, from supermarkets. Limited stocks; no supply from the US and delayed crops from Brazil and Argentina are all factors which have all contributed to this, but the main thing seems to be increased consumption; much more than expected.
The increase in prices for spot and nearby material now also has an effect on (early) new crop shipments. Slowly cheaper offers are disappearing. Demand from Canada and even the US for Argentine and Brazilian peanuts also seems to slumber under the surface. It seems a question of time before we see some real action here.
Brazil is now 80% harvested and despite the delay they have experienced, quality for the bigger part is good and will be EU specs. Around 240,000 to 250,000 mtons will be available for export compared to roughly 200,000 mtons last season. Some shellers still have to fulfill contracts from last year at (mostly) lower levels, but it seems that Brazilian shippers have been operating with caution and started offering small volumes until they felt really sure about the quality and quantity of this season’s crop. Shellers are expecting that the last 30% harvested will have lower yields and some quality issues but overall we can say a good crop. In general we see blanched 38/42 being offered at around USD 1650 CFR EMP basis; raw 38/42 (if available) at around USD 1500 to 1550 CFR EMP basis.
Argentina just started digging (around 10% done) recently and harvested just a few trucks so far. So knowing that the crop is also rather late Amberwood Rotterdam expects shipments of raw peanuts not before late May and shipments of blanched peanuts not before late June at the earliest.
From previous reports, Herman knows that quality in general is good. Yield is expected to be similar to last season which means around 3,5 mtons inshells per hectare. In view of the reduced planting area this means that the available quantity of kernels for export is around 578,000 mtons which means roughly 85,000 mtons less compared to last season! Let’s hope weather in the next 2 months will allow shellers to harvest the crop without any further delay caused by rain or frost. Current crop is sold out and new crop blanched 38/42 being offered at USD 1650/1680 CFR EMP basis.
The US is going through a very difficult year with very poor quality. Prices have risen to unexpected high levels for ‘just’ USDA quality not even talking about more strict specs such as EU afla. Prices for blanched jumbo’s EU spec are supposed to be over USD 2000 spot Europe provided you can even find them. US Domestic prices are supposed to be around 85 to 90 cnts and around a dollar or 1.05 for blanched; again this is for USDA negative material. It is a big question-mark whether the US will have enough quality peanuts until new crop which also explains the rumors that US buyers have showing interest for Argentine and/or Brazilian peanuts.
The pressure on the new crop will be enormous and first new crop positions will probably do a premium. New crop prices are supposed to be in the mid to high 50’s (USDA negative) which seems cheap reading the above.
From China, Amberwood received the following update:
“The peanut market remained bullish in the past several weeks, average price increase is over CNY1000/MT all over the country, while the increase for certain varieties (Runner type and Red skin) exceeded CNY1500 in certain areas. There is rumor that the Coronavirus is slowing peanut importation, which cannot be confirmed, but this should be helpful to keep market on high side for a certain period of time, as there should have be more arrivals of imported peanuts from April and onwards and not good news for a bullish market. There should be about 30% left in farmer stocks, not very big volume, seeing that plantation will start in late April/early May, we shall expect that price will remain at high level till then. There is still not much to say about export market-the high price has made it more difficult for customers to buy forward shipment, while exporters are also exposed to the quick increase in raw materials market.”
With all of the above in mind it seems the spot market in Europe will remain tight till July. Shipments from Brazil are about to start but most, if not all, these shipments are against old (last year) contracts or sold earlier to other very eager receivers of good quality peanuts!